CDR revamp on; banks seek 25% capital for promoters

Amidst mounting concerns that many promoters who have got their loans restructured are misusing the CDR mechanism, bankers today called for higher equity infusion, to the tune of one-fourth of the CDR demand.

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CDR revamp on; banks seek 25% capital for promoters

Amidst mounting concerns that many promoters who have got their loans restructured are misusing the CDR mechanism, bankers today called for higher equity infusion, to the tune of one-fourth of the CDR demand.

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Amidst mounting concerns that many promoters who have got their loans restructured are misusing the CDR mechanism, bankers today called for higher equity infusion, to the tune of one-fourth of the CDR demand. "We have decided to demand higher capital infusion, to the tune of 20-25% of corporate debt restructuring (CDR) amount being sought by the promoters of companies that seek loan revamp, from the current 15%.

However, no final decision has been taken," State Bank of India deputy managing director Soundara Kumar told reporters after a hurriedly convened meeting of the CDR cell here today. According to reports, already loans worth over Rs 60,000 crore have gone for CDR last fiscal, a rise of a whopping 156% from a year earlier, making it the highest since the CDR cell was launched in 2001.

The number of CDR cases jumped to 84 during FY12, compared to 49 a year earlier. Significantly, this amount is excluding the Rs 22,000-crore CDR of Air India, which was done outside this cell, and those of the state electricity boards, which is close to Rs 30,000 crore (figures for only two SEBs of Rajasthan (Rs 12,000 crore), and Haryana (Rs 8,000 crore) while those of Tamil Nadu SEB was not available.

A recent Crisil report said losses of discoms rose 24% to Rs 27,500 crore between 2006-07 and 2009-10, which may rise to Rs 35,000-40,000 crore in 2010-11. Banks bring cases to the CDR cell, an informal forum of bankers approved by the Reserve Bank, to negotiate relaxed repayment terms with struggling borrowers. Cases brought to the CDR during the year included big-ticket loans to telecom tower services provider GTL , shipbuilder Bharati Shipyard , Hindustan Construction , Leela Hotel and several sugar and steel mills.